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Fraud*According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain*As defined in Wikipedia

Tuesday, May 10, 2011

We all talk about the fraud on Wall Street, The Federal Reserve and even many of our politicians. But all we do is talk - present company included. But here are a couple of citizens who stopped talking and took action to back up their beliefs. My hat's off to them.

The first known whistle-blower lawsuit to assert that the taxpayers were defrauded when the federal government bailed out the American International Group was unsealed on Friday, joining a number of suits seeking to settle the score on losses related to the financial crisis of 2008.

The lawsuit, filed by a pair of veteran political activists from the La Jolla area of San Diego, asserts that A.I.G. and two large banks engaged in a variety of fraudulent and speculative transactions, running up losses well into the billions of dollars. Then the three institutions persuaded the Federal Reserve Bank of New York to bail them out by giving A.I.G. two rescue loans, which were used to unwind hundreds of failed trades.
The loans were improper, the lawsuit says, because the Fed made them without getting a pledge of high-quality collateral from A.I.G., as required by law.

Fraud, as the definition at the top of the page says, is an illegal activity. In my way of thinking, an illegal activity is against the law and anything done that is against the law is punishable by law. That is of course, if those charged with upholding our laws act according to their delegated duties and responsibilities.

Indeed. those charged with the responsibility do not discharge their duties "according to the law" then they themselves may be operating illegally and should be subject to punishment themselves.

The evidence of fraudulent activities by Goldman, A.I.G., Deutsche Band and all the other bands of merry banksters has been brought to the forefront for over three years now yet nothing meaningful has ever been done. While I also believe in the basic rule of law that everyone is presumed innocent until proven guilty, the concept of prosecuting a criminal case where there is sufficient evidence to do so, is also a duty our justice system must employ.

“To cover losses of those engaged in fraudulent financial transactions (emphasis added) is an authority not yet given to the Fed board,” said the plaintiffs, Derek and Nancy Casady, in their complaint, filed in Federal District Court for the Southern District of California.

"Fraudulent financial transactions...." evidence of which we have seen, heard and read about for years. There should be sufficient evidence to take action.

Senior Fed officials have stated repeatedly that they had to take unusual steps in 2008 because the global financial system was close to breaking down. The Casadys’ lawyer, Michael J. Aguirre, argued that even so, the Fed was required to comply with its own governing statutes. He said that when the Fed bailed out a nonbank, it was required to secure the loan with the same liquid, high-quality collateral it required when lending to a troubled bank.

While the Fed was not named as a defendant in the law suit, this above the law, privately held and secretive company has much to answer for as well. Perhaps this law suit will bring out the seemingly illegal actions they took and open the door to not only audit them but to investigate them as well. We need to take a closer look at those in charge like Timothy Geithner and his actions while President of The New York Federal Reserve Bank. We need to take a closer look at the actions of Henry Paulson, former CEO of Goldman Sachs while he was Secretary of the Treasury during this financial crisis. Both men seemingly condoned the actions of these financial institutions who caused our Great Recession and aided and abetted their actions using taxpayer money to coverup their schemes and possible fraudulent activities.

A spokesman for A.I.G., Mark Herr, said the Casadys’ lawsuit was “devoid of merit” and said Mr. Aguirre appeared to be recycling old and discredited legal theories.

Not a surprising comment from A.I.G. who was one of the major beneficiaries of all of these questionable activities.

Not surprising either is the following comment:

A spokesman for Goldman Sachs said he was not familiar with the Casadys’ lawsuit and could not comment on it. A spokeswoman for Deutsche Bank declined to comment.

The basis of the law suit is explained as follows.

The Casadys’ lawsuit says the resulting law needs judicial review because it went flying through Congress with little debate and now appears to be feeding high-risk behavior. Investors in nonbanks now expect that the Fed will open a safety net to catch them, should they falter, the suit contends.

“Congress did not show a legislative intent to convert the Federal Reserve into a bank for bailing out failed speculators,” the complaint asserts.

Our country needs more people like the Casaday's. We all need to rally behind them in their quest for justice.

1 COMMENTS:

There's Deep Fraud On Wall Street, And Goldman's Behavior In Greece Is Just The TipSen. Ted Kaufmann

Returning the Rule of Law to Wall Street

Mr. President, it is high time that we return the rule of law to Wall Street, which has been seriously eroded by the deregulatory mindset that captured our regulatory agencies over the past 30 years, a process I described at length in my speech on the floor last Thursday. We became enamored of the view that self-regulation was adequate, that “rational” self-interest would motivate counterparties to undertake stronger and better forms of due diligence than any regulator could perform, and that market fundamentalism would lead to the best outcomes for the most people. Transparency and vigorous oversight by outside accountants were supposed to keep our financial system credible and sound.

The allure of deregulation, instead, led to the biggest financial crisis since 1929. And now we’re learning, not surprisingly, that fraud and lawlessness were key ingredients in the collapse as well. Since the fall of 2008, Congress, the Federal Reserve and the American taxpayer have had to step into the breach – at a direct cost of more than $2.5 trillion – because, as so many experts have said: "We had to save the system."

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